To save time and money on home renovations, consider these two ideas.

1.  Heat on the rooms of the house that you are using.  By using space heaters  and ceiling fans instead of your whole-house, forced air system, you can dramatically reduce your ongoing heating bill.

2.  Insulate well. Use weather stripping around doors and windows and put plastic sheeting over the windows.  Don’t forget, you can get a tax credit for making some energy saving home modifications.  Check out http://www.energystar.gov/index.cfm?c=tax_credits.tx_index for more details.

             Proverbs 19:2 says, “It is not good to have zeal before knowledge.”  We live in a society that has zeal and limited knowledge so we miss out on the hidden manna that is available to everyone.

             We have seen many examples where people have sought help at the wrong place or with the wrong people.  Others have found the right people but didn’t know the correct questions to ask.  We know numerous veterans who may be eligible for help but aren’t receiving it because they do not know the rules.  It is often not enough to simply ask a question about taxes and expect to get the right answer from the IRS knowing there are over 71,000 pages of the code. 

             People assume that if they take their taxes to the accountant that the accountant will show them how to pay less in taxes next year.  If you only see your accountant between January and April 15, don’t expect this bleary-eyed person to come forth with all the ways you could have structured your income to pay less in taxes. 

             Equally complex is the college tuition eligibility and financial aid process for reducing college costs.  We have a process for no debt college.  To optimize the result, planning should begin in the eighth grade.  For some we have helped reduce the cost after graduation.

             Most people do not understand the whole process of borrowing and establishing your credit score.  The credit score determines the amount of interest you will pay on a loan.  Our job is to improve the credit score to reduce your interest rate and thus improve your cash flow.

             Food costs can be dramatically reduced by simply understanding how stores merchandize their products and by setting up rules for yourself before entering the store.  Making up lists, using coupons, and checking receipts will add additional money to your pocket.  Even the process of choosing the right store is important to know.

             Utility costs can be dramatically reduced with proper insulation, routine maintenance of your furnace and air conditioner, and attention to energy usage ratings of your appliances.  Additional savings can be found by using water restrictors, fluorescent bulbs, and water efficient toilets.  If the cap and trade agreement happens, you can expect increases of $150 to $250 per month in utility expenses.  Begin making your house energy efficient now. 

             There is so much information available to us today that it becomes overwhelming very quickly.   Be determined and discerning in your search for the best possible solutions.

             Robert Ostrander, CFP®

            SWS Advisors, Inc.

1.  If it has been a few years since you last had your fireplace chimney cleaned, have it done by a professional chimney sweep. 

2. Turn off the water to your outside faucets and drain any remaining water from the pipes.  The outside pipes and faucets are the most prone to freezing, which can eventually cause cracks and leaks.

3. Install weatherstripping around any doors or windows that may be letting in cold air.

        The first option is to sell the home so as to have a more affordable housing expense. Many times homeowners are reluctant because the home would sell below what the family originally paid. This would obviously result in the seller losing money and leave the mortgage company with an unsecured loan for the remainder of the debt. We would call this type of sale a short sale. For such a sale to take place, the mortgage company would have to agree. The homeowner would then have to pay off the unsecured portion of the debt. The advantage would be to protect the family’s credit rating and avoid bankruptcy.

        In some cases the mortgage lender will take a hit on the unsecured portion of the debt, up to 100% of the unsecured amount, to avoid the cost of bankruptcy. If the lender does take a hit, it can result in the issuance of a 1099 to the homeowner for the phantom income, resulting in an income tax on the unsecured portion of the loan. The tax of course would be less than the repayment of the loan. On a positive note, there are some situations where the tax could be avoided.

        There are rescue funds of up to $3,000 available to those in Ohio. Not everyone will qualify, but for certain situations in which a family is behind on their mortgage payments, funds may be available. It is imperative that you can be rescued with the additional funds. They are not inclined to put good money into a bad situation.

        A third option is to file bankruptcy. What hurts the credit score most are multiple late payments. If this is an option to be considered, do not drag out the process if you see that you have no other choice.

        Another, and possibly a more fruitful option, is to take advantage of our Saving Without Sacrifice process. We recently had a riteree come in who was struggling to keep her home. Through our process we were able to identify savings of $500 a month on her $27,000 annual income. It was more than enough for her to avoid foreclosure but because she waited too long, some of the savings could not be realized for one year.

        These are tough times and with some of the proposed changes in government we can only see more difficult times ahead. We encourage you to be more proactive in reducing your living expenses. We would consider it a privilege to be part of your solutions to reduce your monthly costs.

Robert Ostrander, CFP

SWS Advisors, Inc.

1.  Do an energy audit.  If your utility company offers it, get a free check for energy leaks in and around your home.  You can also go to energystar.gov for a guide to do it yourself.

2.  Lower your thermostat in the winter.  You can cut your heating bill by 1-2% for each degree you lower the temperature.  If you get a little chilly in the evening, put on a comfy sweater or sweatshirt or cuddle up with your significant other under a blanket.

             Under the proposed measures to reduce carbon dioxide emissions by our current Congress, called cap and trade agreements, everyone should expect utilities and gasoline expenses to increase.  This increase will primarily impact the low to middle income families as we expect substantial increases in utility bills.  In addition, this will impact heavy users of electricity, primarily in manufacturing, resulting in either the costs to comply with the regulations being passed on to consumers or the transfer of these operations to countries where the cap and trade rules do not apply.  This of course will cause more job losses in this country. 

It is obvious the goal is not to reduce emissions.  The United States has had more reduction of emissions without these agreements than have European countries, which already put these agreements in place.  So what is the point?  The real goal is to introduce a socialist agenda and to create another profit center for energy producing companies.  Ken Lay, former CEO of the now defunct Enron, was a strong proponent of this plan because of the business opportunities and the profits it creates at the consumer’s expense. 

As consumers, we should begin rethinking of ways to reduce utility bills.  Those with low incomes may find there can be help through the Home Energy Assistance Program (HEAP).  Additionally, newer appliances tend to be more efficient than older appliances.   An eighteen year old air conditioner can use as much as twice the energy as a newer model. 

For those in older homes, window replacement may have long-term savings, but measure how long you plan to stay in the home first.  Another great value is to identify energy loss in remote places in the home including crawl spaces, under sinks, and though openings in the basement.  Insulating in and around these areas and caulking around doors and windows offer great benefits in reducing heat and cooling loss.

Attic insulation will yield a high value because it reduces heat loss in the winter and cooling loss in the summer.  It is also important to know that insulation settles over time reducing the R-factor, or energy loss resistance, and should be replaced.  Insulating hot water pipes, changing filters on furnaces, adding hot water heater blankets, and using florescent bulbs rather than incandescent bulbs will also help.  My books Saving Without Sacrifice and Saving Without Sacrifice In Action cover over forty more ways to reduce utility bills.

            Energy cost should double in the next five years because of inflation and the new cap and trade agreements.  As mentioned earlier, fraud is expected to be rampant based on Europe’s experience with these regulations.  The environmental effect is considered so remote that it will not be measurable.  The economic impact could be devastating.  Preparation for what is coming is always the best cure.

            Robert Ostrander, CFP®

            SWS Advisors, Inc.

A new Energy Star-rated model runs on about $40 worth of electricity.  A new $600 refridgerator will last for decades and could pay for itself in less than seven years.

To see how much you can save by replacing your old refridgerator, click here.

 As the productivity in this nation continues to turn down and resources become more scarce, housing costs will become an ever increasing problem for many families.  As we have mentioned in previous articles, the government has created a massive Ponzi scheme with the underfunded Social Security, Medicare and Medicaid programs which will result in significant inflation. With significant inflation and tighter controls on credit, finding affordable housing or rentals is expected to be more difficult in the future.  This will increase the number of homeless on our streets. Interest rates will soar.  The number of people who can make the high mortgage payments will decrease bringing values down, but not prices.

 Large square footage homes in the suburbs will be a risk primarily because many will find themselves facing reduced incomes precipitated by a decline in productivity.  The productivity decline is caused by the large tax burden (direct and indirect) placed on the goods and services produced by this nation.  If too many people move out of a community, the tax revenue will not be able to provide essential, emergency services. This would cause more people to move away because they would no longer feel safe or protected.

In addition, with the cap and trade proposals designed to reduce carbon emissions, many are estimating that utility bills will double.  This again will make high square footage homes less desirable because of the need to heat and cool them.  The cap and trade agreements also become another indirect tax for the poor to overcome.  It is important for proponents of the global warming theory to pass this bill before too many people find out that the earth is currently experiencing global cooling.

Smaller, low square footage homes found primarily in the city will experience an increase in value and demand.  The need for mass transit will rise as people look for cheaper modes of transportation.  Mass transit will not be as available in the suburbs.

Another formidable hurdle for the housing industry is that currently one in every five homes has a mortgage that exceeds the value of the home.  Inflation will reduce this problem in the long term, but many may face financial burdens that will make it difficult for them to overcome the debt payments.    The government is looking at permitting people to refinance even if the mortgage exceeds the value of the house by more than 5%.  This is currently the permissible amount.  All of these steps result in placing people into more bondage with higher interest rates.  These agreements also weaken our economy because the government stands behind any defaults that may occur.

The current Washington DC power base has set us on a course for these events to take place.  We have a narrow window to reverse this trend.  The solutions cannot be found with business or government.  Artificial economic solutions (decisions not based on sound financial principles) created by government for business to carry out are not solutions at all.  Solutions can only be found with virtue, justice, integrity and a morality based on this nations traditional Judeo Christian values.  Families and faith based organizations will need to step forward to assume their traditional role of care for aging parents, the disabled, the homeless, widows, orphans and the poor, many of whom have been relying on programs like Social Security, Medicare and Medicaid for their survival.    

Robert Ostrander, CFP®

SWS Advisors, Inc.